RRSP overcontribution

[pistacchio]

Hi team,

Long time reader, first time writer. Just spent 3 hours and can't figure this out. Before putting my head through the wall, thought I would ask.

The basic question is, when one makes RRSP withdrawals, where does the CRA account for that as having reduced past contributions (I am in overcontribution position).

What I think...

On NOA, there is a line called "Unused RRSP contributions previously reported and available to deduct". Is this the line where the withdrawals flow through in CRA records (this number increases with contributions and decreases with withdrawals)? Meaning, my reconciliation, makes sense mechanically:

Unused RRSP cont. reported/undeducted
$5,008.00   Per 2018 NOA

2019 contributions
$3,636.00   Per CRA

2019 withdrawals
-$2,275.62   Per T4RSP

Unused RRSP cont. reported/undeducted as should appear on 2019 NOA
$6,368.38   

Thank you all dearly!
Viktor

[pistacchio]

Hello,

I'm sorry to bump this but curious if anyone has a thought as I try and prepare the OVP form.

Thank you,
Viktor

[Dogastrophe]

Not completely following what you are asking.

If your NOA shows a RRSP reported and now available to deduct, it means the deduction did not take place in the same year as the contribution occurred (I had this happen once due to a typo on my return. eg. contributed $X,629 but only claimed $x,269, leaving the difference as report not claimed)

In your example below, 5008+3636-2275.62 = 6368.38 available to claim on taxes.

[pistacchio]

Hi Dogastrophe,

Sorry, I think I made the example needlessly complicated but the way you explained it is clear. I think we're on the same page.

Thank you.
Viktor

[Goldielocks]

HI Pistachio -- CRA does not track your withdrawals* other than adding them to your income for the year the withdrawal was made.

They only really track contributions.

Hi team,

Long time reader, first time writer. Just spent 3 hours and can't figure this out. Before putting my head through the wall, thought I would ask.

The basic question is, when one makes RRSP withdrawals, where does the CRA account for that as having reduced past contributions (I am in overcontribution position).

"Unused RRSP contributions previously reported and available to deduct".

Unused RRSP cont. reported/undeducted
$5,008.00   Per 2018 NOA

This line means that in 2019 (the year after your NOA), you can deduct $5008.00 PLUS any additional contributions to your RRSP from your income for that year.

2019 contributions
$3,636.00   Per CRA

2019 withdrawals
-$2,275.62   Per T4RSP

So in 2019, you contributed $3,636 and had the $5008.00 from before... you can deduct (subtract) from your income the total of $8,644.

The $2,275.62 withdrawal does not apply in any way to your contribution room. It is only added to your income for 2019.

Once it is noted on your taxes, that $5008 contribution was removed from your contribution room already on the 2018 tax return. So it does not affect the contribution room calculation anymore.

Unused RRSP cont. reported/undeducted as should appear on 2019 NOA
$6,368.38   

Nope, this is not how it works.... 

Unused contribution room calc example**:
2018 NOA unused room for 2019 = $20,000 (just a guess for example)
2019 contributions $3636
2019 income $50,000 (another example/ guess)
2020 new contribution room based on 2019 income" $50k x 18% = $9,000

Total 2020 contribution room
Starting amount for 2019 = $20,000 (from 2018 NOA)
minus 2019 contributions $3636
Plus new room $9,000
 = TOTAL 2020 contribution room (reported on 2019 NOA): $25,364

**If you also have a pension, then there is another line to add / subtract to this calc.

*okay, okay, for the picky people out there, CRA tracks HBP and LLP withdrawals / contributions, but that is an entirely different situation.